The firm’s factory in Peterlee axed 400 of its 1,000 strong workforce two years ago when the recession hit.

But Caterpillar said orders have returned to 2007 levels and it has taken on 100 agency staff this year – half of whom have since been given permanent positions – and expects to recruit a further 100 before the year is out.

The latest appointments come on top of 250 agency workers taken on last year and see the numbers at the factory again top 1,000.

Caterpillar plans to invest about £5m in the plant as part of a £90m a year development programme.

Chief executive Doug Oberhelman said: “We plan to be very aggressive, very competitive in the UK.

“We are looking at plant upgrading, modernisation and some expansion.”

Caterpillar expects to return to its former capacity of 3,000 vehicles a year by the end of 2011.

“Production levels have doubled year-on-year from 2010, and are forecast to increase again for 2012,” said site manager Phil Handley.